3 Ways to Simplify Fixed Assets Accounting with QuickBooks

By Stephen L. Nelson

Use QuickBooks 2016 to manage your fixed assets accounting (which means tracking all your business’s assets) — but it can turn into a mess if you’re not careful: Your fixed assets lists tend to grow over time, ultimately becoming cluttered with stuff you may not even remember purchasing. You can, however, try the following three techniques to simplify your fixed assets accounting.

Create a written $500 capitalization limit for Fixed Assets

The first thing to do to make your fixed assets accounting easier is this: Create a written policy that says you’ll expense (immediately write off) any fixed asset purchase that costs $500 or less. In other words, set a $500 dollar limit which an item’s cost needs to exceed in order to be added to your QuickBooks Fixed Asset list (more details about that list are coming up).

Now this method sounds a little crafty, perhaps, but think about it: Technically, you should depreciate a $2 pencil if it will last more than a year. But nobody does that. Everybody immediately expenses that type of purchase. Most people probably also want to immediately expense a $50 desktop lamp and a $100 item like a cheap chair.

This approach means such items don’t end up cluttering your Fixed Asset list (or even your balance sheet).

You may want to confer with your tax accountant before finalizing your capitalization policy due to the new Treasury Regulations that affect tax accounting starting in 2014. A good tax accountant can help with any adjustments you need to make to comply with the new Treasury Regulations. Furthermore, state income tax laws and property tax laws can influence what’s prudent and acceptable in your area.

Use the QuickBooks Fixed Asset list if you have lots of stuff

If you do have lots of stuff (even after setting a $500 capitalization limit), do use the QuickBooks Fixed Asset list. That use will at least keep your balance sheet quite a bit cleaner. Here’s how: The Fixed Asset list keeps a separate list of your fixed assets items. And that means that you don’t end up with fixed assets appearing as accounts or subaccounts on your balance sheet. Your Fixed Asset list will probably have lots of detail in this case, but at least the clutter will be contained.

Annually cull your QuickBooks Fixed Asset list

One final tip for keeping a manageable Fixed Asset list: On an annual basis, maybe before you have your tax return prepared, you ought to go through the Fixed Asset list and identify the stuff you’ve lost, thrown away, or discovered has been stolen.

If you identify this stuff, you can remove it from your Fixed Asset list. Furthermore, if there’s any remaining basis to be depreciated, your tax accountant may be able to get a bit more write-off on your tax return.

You also want to identify stuff you’ve sold or traded in since the last time you culled the list. These items should also come off your Fixed Asset list, and then the sales or exchanges should be reported on both your federal and state income tax return.